What Determines Consumer Financial Distress? Place- and Person-Based Factors

Keys, B J, Mahoney, N and Yang, H (2023) What Determines Consumer Financial Distress? Place- and Person-Based Factors. Review of Financial Studies, 36 (1). pp. 42-69. ISSN 0893-9454

Abstract

We use credit report data to study consumer financial distress in America. We report large, persistent disparities in financial distress across regions. To understand these patterns, we conduct a “movers” analysis. For collections and default, there is only weak convergence following a move, suggesting these types of distress are not primarily caused by place-based factors (e.g., local economic conditions and state laws) but instead reflect person-based characteristics (e.g., financial literacy and risk preferences). In contrast, for personal bankruptcy, we find a sizable place-based effect, which is consistent with anecdotal evidence on how local legal factors influence personal bankruptcy.

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Item Type: Article
Subject Areas: Finance
Date Deposited: 29 Aug 2024 13:12
Last Modified: 27 Feb 2025 12:46
URI: https://lbsresearch.london.edu/id/eprint/3840
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